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US Sales Tax on e-commerce advances – ‘Amazon Tax’

  • Apr 20, 2013 | Richard Asquith

US Sales Tax on e-commerce advances – ‘Amazon Tax’

Separate initiatives to introduce more cross-state border e-commerce sales tax in the US are making progress.  The aim to is to mirror the European Union’s Distance Selling VAT regime, which requires companies selling into other EU member states to charge and collect local VAT.

Currently, most states do not charge out-of-state retailers sales tax on their sales to resident consumers, which is seen as disadvantaging in-state online and offline retailers.  Consumers are relied upon to make declarations of any tax due – with they may forget or chose to ignore in their annual personal tax returns.

Washington e-commerce sales tax law

In the US Senate, a bill, the Marketplace Fairness Act, to give States the power to levy sales tax on out-of-state retailers will move forward this week.  There will be a vote today, with the backers of the bill claiming they can win following a successful non-binding vote on the bill in March.

The bill is heavily opposed by online retailers Amazon and eBay; but backed by traditional retailers such as Wal Mart.

US States continue to pass local e-commerce sales tax laws

A growing number of States are in the process of passing their own laws which will enable them to start charging sales tax on non-resident retailers.  California is already charging sales tax on ecommerce.  On March 27th 2013, and failed at the New York Court of Appeals in their attempt to strike down the New York state sales tax on their out-of-state sales to local online shoppers.  This tax increases out-of-state website prices by almost 10%.

Many states have instead come to agreements with Amazon for them to open local warehouses, thus creating local jobs, to avoid the out of state sales tax.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is the former VP Global Indirect Tax at Avalara